By SHANNON DININNY, THE ASSOCIATED PRESS

Published 10:00 pm, Thursday, September 7, 2006

YAKIMA -- The cost to build a massive waste treatment plant at the Hanford Nuclear Reservation rose to $12.2 billion Thursday, as the Energy Department announced the results of a new review by the Army Corps of Engineers.

The new estimate does not include any fee to be paid to Bechtel National, the contractor hired to build the plant at the highly contaminated site.

The vitrification plant is being built to convert millions of gallons of radioactive waste to glasslike logs for permanent disposal in a nuclear waste repository. The plant has long been considered the cornerstone of cleanup at the Hanford site, but the project has been mired in cost overruns, construction problems and delays.

In 2000, the construction cost was estimated at $4.3 billion. In May, the Energy Department announced a new cost estimate of $11.55 billion. Energy Secretary Samuel Bodman ordered a full review of that estimate by the Army Corps of Engineers to ensure that it credibly reflects the scope, cost and schedule of the project.

The new review adds $650 million to the overall project cost, including $320 million to cover potential fluctuations in labor rates and $330 million in contingency money.

The review also extends the projected completion date by three months, to November 2019, even further past the 2011 legal deadline established under the Tri-Party Agreement, a cleanup pact signed by Washington state, the Energy Department and the Environmental Protection Agency.

The operating date has already been pushed back three times from the original 1999 deadline.

"We have had early and often discussions with the state on our milestones and what this may reflect. One of those biggest issues is making sure we have a plant that is very credible in its delivery, and that we are committed to doing that," said Charlie Anderson, assistant deputy secretary for environmental management at the Energy Department.

Discussions with the state and regulators to renegotiate the Tri-Party Agreement will continue, Anderson said.

Jane Hedges, nuclear waste program manager for the state Ecology Department, said state officials still needed to review the technical aspects of the report, but were encouraged that the latest review was similar to the most recent estimate.

Key to the cleanup is the removal of 53 million gallons of toxic, radioactive waste from 177 aging underground tanks. Dozens of the tanks have leaked into the groundwater, threatening the nearby Columbia River and making construction of the one-of-a-kind vitrification plant a priority.

In the meantime, the Energy Department will begin renegotiating Bechtel National's contract to build the plant. Under its current contract, Bechtel could have earned as much as $445 million for building the plant. About $200 million was tied to a so-called cost-performance fee for meeting the budget.

However, the Energy Department notified Bechtel in June that it must return $48 million the company had already been paid as a performance fee for the project.